MARKET WATCHMixed indicators push crude futures price below $49/bbl

Nov. 5, 2004
For the first time since September, the near-month benchmark US crude contract plunged below $49/bbl Thursday on the New York Mercantile Exchange, following false reports that Palestinian leader Yasser Arafat, 75, had died.

Sam Fletcher
Senior Writer

HOUSTON, Nov. 5 -- For the first time since September, the near-month benchmark US crude contract plunged below $49/bbl Thursday on the New York Mercantile Exchange, following false reports that Palestinian leader Yasser Arafat, 75, had died.

Doctors treating Arafat for an unknown illness in Paris later reported that he is in a "reversible coma." While some fear Arafat's death would trigger a divisive struggle for succession among Palestinian groups, he is generally viewed by market participants as an obstacle to peace negotiations in the Middle East.

The market also was impacted by a report Wednesday from the Energy Information Administration that US commercial crude inventories jumped by 6.3 million bbl to 289.7 million bbl during the week ended Oct. 29. Traders shrugged off EIA information that US distillate stocks fell for the seventh consecutive week, down by 900,000 bbl to 115.7 million bbl just prior to the start of the winter heating season this week (OGJ Online, Nov. 4, 2004).

EIA said Thursday 44 bcf of natural gas was injected into U.S. underground natural gas storage in the week ended Oct. 29. US gas storage now stands at nearly 3.3 tcf, up by 138 bcf from a year ago and 239 bcf above the 5-year average for this time of year.

Supply disruptions
Meanwhile, poor weather has closed three Mexican ports through which Petroleos Mexicanos ships most of its crude exports of 1.9 million b/d.

Also, the Nigeria Labor Congress said Thursday it withdrew from a joint committee of labor representatives and politicians that was supposed to relieve the effects of rising fuel prices in that country. The union pulled out because of an Oct. 28 letter in which Nigerian President Olusegun Obasanjo said that committee hasn't the mandate to reverse a 24% September increase in fuel prices. That setback sharply reduces chances of avoiding a general strike scheduled for Nov. 16, which labor leaders say will cut off oil supplies from Nigeria, the seventh largest exporter of crude.

Energy prices
The December contact for benchmark US light, sweet crudes plunged by $2.06 to $48.82/bbl Thursday on NYMEX, as the market wiped out all gains from the previous session. The January position dropped $1.98 to $48.84/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., lost $2.06 to $48.83/bbl. Heating oil for December delivery fell by 5.17¢ to $1.37/gal on NYMEX, and gasoline for the same month was down by 5.03¢ to $1.28/gal. The December natural gas contract plummeted by 55.3¢ to $8.20/Mcf.

In London, the December contract for North Sea Brent crude lost $1.55 to $46.01/bbl on the International Petroleum Exchange.

The average price for the Organization of Petroleum Exporting Countries' basket of seven benchmark crudes lost 91¢ to $40.53/bbl Thursday.

Contact Sam Fletcher at [email protected]